Differentiation Strategy and Performance of Selected Supermarkets in Nairobi City County, Kenya

Abstract

The purpose of the study was to assess the extent to which is differentiation strategy influences selected supermarkets' performance in Kenya’s County of Nairobi City. A descriptive research design was used. The study’s unit of analysis was nine supermarkets situated in Nairobi City County. The study respondents included 63 employees from selected supermarket’s functional departments including the following functional managers (Managing Director, Purchasing and Supply Chain, Operations, ICT, Finance, Human Resources, Business Development, and Marketing). The study employed census method. The questionnaire which comprised of semi-structured questions was the instrument applied during collection of both quantitative and qualitative data. Validity and reliability results were tested in the study. Expert judgement was used to test validity while reliability was tested using Cronbach’s alpha. All the study variables were found to be reliable and valid. SPSS software analyzed qualitative data through descriptive statistics like means, standard deviations, and inferential statistics of regression analysis. Presence of a positive and significant link between performance and differentiation strategy (with β=0.629 and p=0.000) was recognized. Differentiation strategy was also found to significantly and positively impact performance. Higher differentiation levels lead to increased performance of selected supermarkets. Innovation and new product introduction by supermarkets enhanced its performance. Functional managers should create and implement strategies to minimize operational costs and reduce commodity prices. Product innovation should be sustained to fast-track product differentiation, enhance competition, and create barriers to entry in the market. Technology adoption should also be fast-tracked in all supermarket processes to enhance efficiency as well as effectiveness.